Why You Need to Carefully Choose a Financial Advisor

By March 13, 2017 Blog No Comments

Today’s post is brought to you by Timothy LaPean, owner of Thoughtful Financial PlanningTimothy and I became friends through the XY Planning Network (a group of like-minded, fee-only planners who work with Generation X and Y clients) and I asked him to write some thoughts on what goes into choosing a financial advisor as a guest topic for this site.

Take it away, Tim! 

If you are searching for a financial advisor, there are certain things you should think about before making your selection

Working with a financial advisor could be the most rewarding decision you ever make or it could be one of the worst if you don’t choose carefully. Because there are so many different types of financial professionals out there, narrowing down your options to find the best one for your needs can feel like an impossible task.

The good news is that the financial advisor you’re looking for is out there if you know the right things to look out for.

Consider These 5 Factors When Choosing a Financial Advisor

  1. Expertise varies. Ask where a potential financial advisor went to school, what financial designations they have, and how often they return for continuing education. The level of expertise each financial advisor varies widely.
  2. Pay structure varies. Fee only, fee based, and commission based are a few of he most common pay structures of financial advisors I would suggest avoiding commission-based advisors who may have an incentive to sell you something rather than put your best interests first.
  3. Not all financial advisors are fiduciaries. Speaking of your best interests, a fiduciary signifies just that. It means a financial advisor adheres to a professional code of ethics to truly put your best interests above their own at all times.
  4. Specialties vary.While some financial advisors have ten designations trailing their name, most do not have such a breadth of specialization. Be wary of someone who claims to specialize in everything. While good financial planners have to have a broad range of knowledge, they can’t be all things to all people.
  5. Approach varies.What sort of approach does the advisor take to advising/management/planning? Is he going to take you beyond basic budgeting and lifestyle choices and really move into territory you couldn’t have done yourself. How will this financial advisor serve your financial needs in the first year and the following years? Make sure you understand what you can expect in the short term, as well as in the long term.

When you know what you’re looking for and you carefully consider all your options, you are able to make an informed decision about which financial advisor to work with. It may not always seem easy and you may even switch financial advisors a time or two before you find the perfect one. The point is that you continue to work towards reaching your financial goals. The right financial advisor can help you do just that even if the process to find him or her takes a little extra time and effort.


Timothy LaPean - Timothy 07 2014 417About the Author: Timothy J. LaPean, CFP®, ADPA® is the owner of Thoughtful Financial Planning, a fee-only financial planning firm located in Minneapolis, Minnesota. Thoughtful Financial Planning specializes in helping women, members of the LGBTQ community, and the people who love them manage the financial side of living a more fulfilling life.


About Woven Capital

Aaron Hatch is a Certified Financial Planner and co-founder of Woven Capital, a fee-only financial planning and investment management firm that specializes in helping people balance life, work, and community. Aaron has been quoted in various publications, including The Chicago Tribune, US News and World Report, and the Huffington Post among others. Aaron can be reached at aaron@wovencapital.net